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UP-TO-DATE: Keeping you informed of business today

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Eskom focused on reducing carbon footprint

Though Eskom is focused on reducing its environmental and carbon footprint, it has to balance the need for power across the country with maintenance at several stations to improve emissions performance.

“The execution of this programme will require long outages and a significant amount of capital (currently R72 billion in nominal terms) and will achieve 57% compliance with the National Emissions Standards by 2026,” says Andrew Etzinger, senior general manager at Eskom.

It has to be borne in mind that certain new technologies need water that is not currently available. And owing to South Africa’s high electricity demand, which is restricting the number of required outages for a retrofit, Eskom will not be able to meet its legislated “green” deadline. As such, the utility has applied for a five-year postponement.

New infrastructure, however, is designed to be more efficient and to reduce any negative effects. And Eskom has an industry-leading climate change policy being implemented throughout the business.

The development of Eskom’s two key renewable energy projects – the Sere wind farm in the Western Cape and the concentrated solar thermal power station near Upington – is in progress. On completion, the wind farm will consist of 46 wind turbines, each with a capacity to produce 2,3 MW of clean electricity.

“The 100 MW wind farm will be fully commissioned in the 2014/15 financial year, saving about 230 000 tons of carbon emissions per year,” says Etzinger.

From the Upington plant the saving will be estimated 450 000 tons of carbon dioxide emissions.

Source: Financial Mail, 25 September  –

1 October 2014

South Africa’s recycling rates among world’s best

While many people believe that packaging is a major contributor of waste to landfill, this isn’t the case, says Zanele Salman, Nampak Group investment manager.

According to the Packaging Council of SA (PACSA), packaging accounts for just 2% of waste to landfill, whereas the average for developing nations is 3%. This was said at the third annual Environmental Crimes Conference in September 2014.

Thanks to industry initiatives such as Collect-A-Can, Petco and The Glass Recycling Company, South Africa’s recycling rates are among the best in the world.

At 72%, cans are the most recycled packaging in South Africa. As a country, we are among the top can recyclers in the world. At present Nampak Bev can is completing the conversion from steel to aluminium beverage cans. Since aluminium has a higher scrap metal value and can be recycled in perpetuity, it’s likely that recycling rates will increase in the future.

In terms of glass, the industry recycles 1 billion bottles a year, which is 2,8 million bottles a day. We surpass the US, which has a recycling rate of 37%. Similarly, about 38% of PET is recycled as staple fibres in carpeting, clothing and coat hangers, as well as duvets, pillows and sleeping bags. Other uses are ceiling insulation, irrigation pipes, shade cloth and shopping trolleys. Without these interventions, PACSA estimates that packaging waste to landfill would be more than twice as much as it is now.

Collect-A-Can is an initiative subsidised by ArcelorMittal and Nampak and incentivises people to collect cans. Since 1993, it has created about

100 000 jobs.

However, one of the most pressing issues in South Africa remains the absence of a recycling culture. According to a 2010 CSIR study, only 3,3% of South Africans living in urban areas recycle with any degree of regularity.

Traditional office environment could become outdated in the near future

The traditional “nine to five” office environment could soon become outdated and be a thing of the past in many organisations, according to a report issued by PwC. The future of work: a journey to 2022 report shows that only a minority of workers would want to work in a traditional office environment in the future. One in five people say they want to work in a “virtual” place where they can log on from any location or use collaborative work spaces.

The report discloses a number of projections for what the future of work might look like based on a survey of 10 000 workers and 500 HR professionals globally.

Staff are also more likely to see themselves as a member of a particular skill or professional network rather than as an employee of a specific company. People will be categorised and rewarded according to their specialist expertise, which will create increased demand for people to have a personal stake in the organisation’s or project’s success. Options such as project-related bonuses are therefore going to become more common.

According to the report, people believe that they will have their own brands and sell their skills to those who need them. They will be working for themselves – where they choose. In addition, many companies will be too small to have HR hiring teams and will look to technology or dedicated agents to supply needs.

The report points out that a key challenge is ensuring that the people being hired really do possess the expertise required or claimed. This will demand a combination of effective verification and watertight contractual agreements, possibly with penalties for poor delivery and non-delivery. “It is going to require a high degree of relationship building and business trust,” says Barry Vorster, PwC People and Change Leader. “Many contractors and partners will adopt ‘eBay-style’ rating of past performance to assist in landing the next contract,” adds Vorster.

Vorster says: “Tremendous forces are significantly reshaping the world of work. Economic shifts are redistributing power, wealth, competition and opportunity around the globe. Disruptive innovations, radical thinking, new business models and resource scarcity are affecting every sector.

“Businesses across the world are beginning to understand that they need a clear and meaningful purpose, and mandate for the decade ahead if they are to attract and retain employees, customers and partners.”

Furthermore, the reports shows many HR professionals are already preparing for this shift towards more portfolio careers, as they predict that at least 20% of their workforce will be made up of contractors or temporary workers by 2022. Nearly a third of HR professionals are building their talent strategies around the rise of the portfolio career, hiring a diverse mix of people on an affordable, ad hoc basis.

Electrically zooming along

Worldwide, there are now more than 830 million cars on the road, forcing governments to impose more stringent pollution emission standards on new cars. Hence the drive towards the electrification of cars.

Electrified cars, ranging from pure plug-in battery-powered ones to hybrids – conventional cars with some element of electric power incorporated – are becoming more common. In August 2014, the number of mass production highway-capable all-electric passenger cars and utility vans available in the market has been limited to about 30 models. Most electric vehicles in the world roads are low-speed, low-range neighbourhood electric vehicles or electric quadricycles.

Pure electric car sales in 2012 were led by Japan with a 28% market share of global sales, followed by the US with a 26% share, China with 16%, France with 11% and Norway with 7%.

As of June 2014, more than 300 000 highway-capable all-electric cars and light utility vehicles have been sold worldwide since 2008. The Renault-Nissan Alliance is the leading electric vehicle manufacturer with global sales of over 176 000 all-electric vehicles delivered by the end of August 2014. Ranking second is Tesla motors with about 42 500 electric cars sold since February 2008. Mitsubishi Motors is the third best selling all-electric vehicle manufacturer with global sales of over 37 000 all-electric vehicles between July 2009 and June 2014.

Electric bikes, or e-bikes, are also taking off and have enormous potential to replace the aging dirty mopeds that pollute many urban centres in developing countries. The Asian Development Bank is working with the Philippines to begin replacing an estimated 3,5 million gas-powered mopeds and motorcycles with electric bike and trikes.

Source: Business Report, 1 October 2014

Technical updates

ACCOUNTING

Useful guidance on the application of IFRS and IFRS for SMEs

A comprehensive list of useful IFRS and IFRS for SMEs application guidance that is available for use by academics, students, accounting practitioners and preparers has been issued by the IFRS Foundation Education Initiative.

SAICA APC expresses its views on the proposed approach to accounting for an entity’s dynamic risk management activities

In its submission to the International Accounting Standards Board (IASB) on the proposed approach to accounting for an entity’s dynamic risk management activities, SAICA’s Accounting Practices Committee (APC) noted that the application of this proposed approach could be burdensome to implement and apply.

The SAICA APC comment letter on ED 342 – Discussion paper on Accounting for Dynamic Risk Management: A Portfolio Revaluation Approach to Macro Hedging can be downloaded from the SAICA website.

Amendments to address inconsistencies between IFRS 10 and IAS 28 issued

Amendments that will address inconsistencies between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) in relation to the sale or contribution of assets between an investor and its associate or joint venture have been published by the IASB. The amendments are effective for annual periods commencing on or after 1 January 2016. Earlier application is permitted.

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture: Amendments to IFRS 10 and IAS 28 can be downloaded from eIFRS. The IASB press release can be downloaded from the IASB website.

Four IFRSs amended

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits, and IAS 34 Interim Financial Reporting have been amended under the IASB′s Annual Improvements project.

The amendments are effective for annual periods beginning on or after 1 January 2016. Early application is permitted.

Annual Improvements to IFRSs 2012–2014 cycle can be downloaded from eIFRS and the IASB press release can be found on the IASB website.

Tax

Tax-free savings accounts

The 2014 Taxation Laws Amendment Bill was tabled before Parliament in October and one of the more important amendments affecting individuals is the introduction of tax-free savings accounts effective 1 March 2015

Tax-free savings accounts have been introduced to encourage lower- to middle-income earners to save. Individuals will be allowed to invest in specific savings vehicles offered by various financial institutions (to be published in a Notice by the Minister) and will not be liable to tax on the investment income earned therefrom, as long as the requirements set out in the Amendment Bill are adhered to, namely :

•  Annual savings limit of R30 000 per individual, and

•  Lifetime savings limit of R500 000 per individual

The annual limit may be adjusted for inflation each year, but the lifetime limit is likely to remain constant. Should an individual exceed the limits, a penalty of 40% of the excess investment will be imposed by SARS ; however, the investment income earned on the excessive investment will remain tax-free.  The interest and dividend exemptions currently available to individuals will still be available until further notice .

UKZN students win JSE Investment Challenge

University of KwaZulu-Natal Finance honours students Brian Masondo and Wesley Bohata were part of the winning team that trumped 140 teams who competed in the JSE Investment Challenge to claim the number one spot nationally.

The third-year finance students from the School of Accounting of Economics and Finance flew the UKZN flag high when the news of their achievement was made public at the awards ceremony held at the JSE in Johannesburg in October.

The JSE Investment Challenge is a national financial literacy competition that provides South African high school pupils and university students with an opportunity explore the world of investing by trading JSE-listed shares through a virtual portfolio.

Finance academic leader and  lecturer Dr Mabutho Sibanda said this achievement was proof that the approach they have adopted as a discipline of combining academia and industry practices is a recipe for success.

Snoek and cycling do it for Cape Town

According to a new “obecity” index released by South Africa’s biggest medical scheme administrator, Discovery Health, the Mother City’s middle classes are the happiest and most active inhabitants of South Africa’s six major cities. Bottom of the pile is Bloemfontein.

“We need to understand more about what people are doing to motivate them to change,” said the head of Discovery Health incentive scheme Vitality, Craig Nossel.

Being overweight increases the risk of non-communicable diseases ranging from diabetes to cancer, said Dr Nossel, noting that 60% of South African women and 30% of men were overweight or obese.

The fact that South Africa has a growing proportion of people who are unhealthily overweigh is not just a problem for the individuals concerned; it also places an increasing economic burden on the state, medical schemes and insurance companies.

Discovery found its medical scheme members who were overweight or obese had health care costs in 2012 that were 30% or 50% higher than those of people in the normal weight range, said Dr Nossel.

A measure called the body mass index (BMI) is used to determine whether someone is too fat: a score of more than 25 is considered overweight and one over 30 is obese. The BMI is obtained by dividing a person’s weight in kilograms by the square of their height in metres.

Vitality’s “obecity” index was devised from data collected from 170 000 Vitality members during 2013, including information on weight, food and drink choices, physical activity and mental health.

It ranked Cape Town first, followed by Johannesburg, Port Elizabeth, Durban, Pretoria and Bloemfontein. The difference between the cities was small and even Capetonians had plenty of room for improvement, said Dr Nossel.

Food companies, the government and individuals all had a role to play in countering South Africa’s obesity epidemic, he said.

“The government needs to look at subsidies for healthier food and taxes on unhealthy ones,” he said, noting that processed food laden with fat, sugar and salt was typically cheaper than healthier options. “But people must not forget that they are responsible for making healthy choices in their specific settings,” says Professor Marjanne Senekal, head of the division of human nutrition at the University of Cape Town.

The index showed Bloemfontein scored lowest for fruit and vegetable intake, had the highest consumption of sugary drinks and salty food, and ranked second lowest for physical activity.

Pretorians had the highest score for adding fat, such as butter, to their food, and the lowest for sleep quality. They spent the least amount of time exercising and the second-most time sitting. Port Elizabeth and Durban residents were moderately active but made lousy food choices, which pulled their ranking down.

Johannesburg had the best scores for weight status measures such as BMI and body fat percentages, but spent the most time sitting. Capetonians made the best choices for food and drink and psychological well-being, and ranked second in weight status.

Source: Business Day, 22 October 2014

Young entrepreneurs walk away with prize money at Deloitte Challenge

With the Internet providing billions of consumers, American kids as young as 10 years old are starting businesses which earn up to six-figure incomes. Deloitte now reckons that global success beckons for winners in their local entrepreneurship competition.

Two local entrepreneurs recently won the Deloitte Challenge and walked away with combined R50 000 in prize money at the LaunchLab Ideas programme. The Deloitte Social Change Challenge awards the best social enterprise designed to create a positive, sustainable impact on any vulnerable community in Stellenbosch.

The winning idea, which netted entrepreneur and former UCT economics major David Gluckman R30 000 in seed capital, has already had social agencies from Latin America to India keen to buy his early-warning fire detection device once it was finally launched on 31 October. The early-warning device warns residents and neighbours in the event of a shack fire – a problem common to many developing countries.

Winner of the R20 000 award was Specular, an app for visually impaired people. The idea originated from a class project at  Stanford University in the US when Stellenbosch University BCom student Stephanie Cowper was in residence there. Market research at a 1 500-strong conference of blind people identified a need for the app.

Cindy Benjamin, Senior Marketing Manager at Deloitte, confirms the depth of talent among those pitching their business ideas. “This year’s entrants had some largely high-tech ideas, many of them capable of reaching a global market.” The two Deloitte Challenge winners are already on the path to attaining global markets.